Why No Plan To Withdraw Dormant Refining Licences – Nigerian Govt

Government’s Stance on Dormant Refining Licences

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has stated it has no current plans to withdraw refining licences awarded to companies that have yet to build their refineries.

This clarification comes in response to allegations made by the Dangote Group regarding the inactivity of several licence holders.

Dangote Group’s Allegations

The Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, expressed his concerns over the matter.

“The Federal Government issued 25 licences to build refineries, and we are the only one that delivered on our promise,” Edwin said. He emphasized the significance of Dangote’s refinery, noting that it has already exported over 3.5 billion litres of refined products.

Edwin also criticized the NMDPRA for allegedly granting licences indiscriminately. “We deserve every support from the government.

It is good to note that from the start of production, more than 3.5 billion litres, which represents 90 percent of our production, have been exported.

We are calling on the Federal Government and regulators to give us the necessary support to create jobs and prosperity for the nation,” he added.

NMDPRA’s Clarification

In response, the spokesperson for NMDPRA, George Ene-Ita, refuted Edwin’s claims that Dangote is the only operational refinery in Nigeria.

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“Is Dangote the only refinery in Nigeria? Refineries are refineries, either regular or modular. The important thing is that alongside Dangote, there are other refineries producing in this country, maybe not at the same capacity as Dangote; but there are other refineries,” Ene-Ita said.

He listed several operational refineries in various states, including Imo, Edo, Delta, and Rivers, questioning Edwin’s assertion.

“There are refineries now operating. We have a refinery in Imo State, we have two in Edo, we have in Delta, we have in Rivers. So, I don’t understand you saying Dangote claimed they are the only refinery that has delivered. Delivered what?” he queried.

No Immediate Withdrawal of Dormant Licences

When asked if the authority is contemplating withdrawing unused refinery licences, Ene-Ita explained that there is a time frame for such actions.

“There is a moratorium. When you are given a licence to establish a facility, whatever the facility, there is a condition attached to it. There will be a certain time that if you do not come on board to show intent and capacity, then we will be able to review it; that time has not come,” he clarified.

Ene-Ita added, “I agree that you cannot give a licence to establish a particular facility and allow it to run ad infinitum. There will be a specified time frame. If you didn’t meet that time frame, we can now withdraw that provisional licence.”

Industry Reactions

Hammed Fashola, the Vice President of the Independent Petroleum Marketers Association of Nigeria, expressed his opinion on the matter.

“I don’t think the government should withdraw those licences, we need more than one refinery in Nigeria. Those licensees that have yet to build may have their reasons.

There are so many things that can be involved, like the issue of the passing of the Petroleum Industry Act and others,” Fashola stated.

He also emphasized the importance of total deregulation in attracting investors. “No investor will come in an environment where the government is still dictating prices. The government should not withdraw the licences yet,” he added.

Dangote’s Concerns Over Crude Supply

The $20 billion Dangote refinery, located in Lekki, Lagos State, is expected to begin the sale of petrol soon. Aliko Dangote, President of the Dangote Group, highlighted challenges faced by the refinery, particularly regarding the supply of crude oil from International Oil Companies (IOCs).

“It seems that the IOCs’ objective is to ensure that our Petroleum Refinery fails. It is either they are deliberately asking for ridiculous/humongous premium or, they simply state that crude is not available,” Dangote said. He expressed frustration over the need to import crude from distant countries, increasing production costs.

The debate over dormant refining licences continues, with the government maintaining a stance of patience and adherence to stipulated timelines. Meanwhile, industry players like Dangote Group call for greater support and action to ensure the successful operation of refineries in Nigeria.